Exam 33 Wrong Answers Flashcards
An investor wants to invest a fixed dollar sum now that will return a fixed dollar sum in 10 years. He mentions four possible investments. Of those he mentions, which would not be a suitable recommendation for his objective and therefore excluded immediately?
Collateralized mortgage obligations (CMOs)
A young new investor has $10,000 in savings that he does not anticipate will be needed for quite some time. He tells his registered representative; “I want to put it away and forget that I have it while it grows for a long time.” A balanced mutual fund having both equities and debt instruments is deemed appropriate, but which share class would best be suitable and align with the investor’s profile?
B-class shares
Having an annual income of $285,000 and an investment portfolio currently valued at $3,500,000 your customer has always liked real estate as an investment choice. The customer recently expressed that real estate investments offering tax credits would be ones worth exploring. Which of the following would be most suitable real estate investments to discuss?
Historic Rehabilitation and government assisted housing direct participation programs (DPPs)
A client about to retire wants to reallocate an existing portfolio in order to have more predictable income. Of the following, which would not be a good investment recommendation?
Income bonds
A deferred compensation plan would be suitable for which of the following scenarios?
An employer has a handful of highly compensated employees that are near retirement age and would like to offer them a way to reduce current taxes
It is expected that the government will take measures to tighten the money supply in order to contract the economy because inflation is currently rising. Given this expectation which of the following securities could be the least suitable recommendation for a customer that anticipates needing a specific amount of money in four years?
Zero tranche CMO
A customer with a discretionary account is approved for all options strategies and positions. She has instructed her RR however not to employ any positions having an unlimited loss potential. Aligning with the customers directive, which of the following show positions that could still be suitable and executed by the RR in the customer’s discretionary account?
Long calls and puts, long straddles, long or short spreads
An account holder has $200,000 investment portfolio allocated as follows, 70% blue chip stock fund, 30% utility fund. The account holder wants to increase the diversification within the equities positions and reduce the overall risk of the portfolio if possible. With an additional $50,000 to invest, which of the following will give this investor the greatest diversification for the resulting $250,000 investment portfolio?
International stock fund
A married couple, both professionals in their late thirties, have over several years allocated savings toward growth in order to build wealth. Now with an additional $175,000 to invest, they are looking toward college funding for their children ages 11 and 8. Which would be a suitable portfolio mix to recommend given this couples profile?
80% zero coupon bonds, 20% T notes
A customer sets a broad objective of maximizing income in her account. Which of the following lists rank securities from the least suitable to the most suitable recommendation for maximizing income?
Income bond, convertible bond, corporate bond
An investor with a high net worth has the following portfolio mix: equities 50%, debt 15%, options and high yield bonds 35%. The portfolio is spread across a number of individual securities and investment products. This investor’s investment style would conventionally be described as…
Aggressive
